European stocks, including the FTSE 100 and Germany’s Dax, followed Asian markets lower as bad loan woes at two US regional banks spread anxiety worldwide. The Dax fell 1.8%, while Japan’s Nikkei had earlier closed down 1.6%.
The global rout was sparked by Zions Bancorporation and Western Alliance, which plunged after reporting a combined $150 million in credit issues. This news revived fears of a 2023-style banking crisis.
The banking sector was the epicenter of the sell-off. The pan-European banking industry lost €37.4 billion in value, with major lenders like Barclays, Deutsche Bank, and Banco Sabadell all falling around 6%.
The market turmoil fueled a “wall of worry,” sending investors fleeing to safe havens. Gold prices hit an all-time high of $4,378 an ounce. The VIX “fear index” also surged, signaling a sharp rise in investor uncertainty.
